SBA loan basics
Short answer
Yes, an SBA 7(a) loan can be used to purchase a specific brand of franchise, provided the franchise is listed on the SBA's Franchise Directory or meets specific eligibility criteria.
The SBA maintains a Franchise Directory of approved franchise systems. If a franchise is listed, it simplifies the eligibility review. If not listed, the franchise agreement must be reviewed by the SBA or lender to ensure it doesn't contain clauses that might impact the small business owner's control or independence.
A buyer wants to open a new location for "Coffee Haven," a popular franchise. If Coffee Haven is on the SBA Franchise Directory, the loan application process will be smoother. If not, the lender must review the franchise agreement for SBA compliance.
Insider move
Lenders meticulously check the franchise's eligibility through the SBA directory or a thorough review of the franchise agreement. They ensure the agreement provides the borrower with adequate control to operate the business and meets all SBA standards.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
Terms in this answer
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